How to calculate annual leave

How to calculate annual leave (quick answer)

Full-time employees

Annual leave = 4 weeks × ordinary weekly hours

👉 4 × 38 = 152 hours per year

Accrues at 2.923 hours per week

Part-time employees

Annual leave = (Part-time hours ÷ 38) × 152

👉 e.g. 20 ÷ 38 × 152 = 80 hours per year

Accrues at 1.538 hours a week

Annual leave accrual rates by hours worked

This table shows the rough yearly and weekly entitlements based on common schedules. You can use it to estimate how much annual leave employees get at a glance.

Keep reading to learn how to calculate annual leave in Australia for full-time and part-time staff, with step-by-step formulas, examples, and compliance tips!

Annual leave gets messy. Rippling keeps it clean.

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What counts as annual leave in Australia?

Annual leave is an employee benefit. It’s a type of paid leave that full-time and part-time employees earn over the course of their employment. It helps employees maintain a healthy work-life balance without losing income. 

Casual employees generally don’t get annual leave. But they typically receive a higher hourly rate (usually 25% more), called casual loading, to make up for it.

Here’s what does and doesn’t count as annual leave:

✅ Time off for a holiday or break

✅ Leave booked in advance or approved as part of a workplace policy

❌ Sick leave, unpaid parental leave, or public holidays (these are separate leave types)

How much annual leave do employees get?

Under the Fair Work Act, most employees (other than casual employees) have a right to four weeks of paid annual leave per year. They don’t get all four weeks upfront. Employees accrue annual leave progressively from the moment they start working for you. It builds up based on their ordinary hours of work (not overtime).

If you employ shift workers, they may have a right to five weeks of annual leave instead of four. This depends on their award or enterprise agreement.

Unused annual leave usually rolls over from one year to the next. This is unless a specific rule or contract says otherwise.

How do you calculate annual leave for a full-time employee?

As mentioned, if someone works full time (38 hours a week) they get four weeks of paid annual leave each year. To figure out how much leave that actually adds up to in hours, use this formula:

4 weeks × 38 hours = 152 hours of paid annual leave per year

Remember, they don’t get all 152 hours at once. They earn a bit of paid leave each week they work.

It looks like this:

152 hours ÷ 52 weeks = 2.923 hours of paid annual leave per week

So, consider an employee who works 38 hours a week, who's been with you for half a year (26 weeks). They’ll have built up:

2.923 hours × 26 weeks = 76 hours of paid annual leave

How do you calculate annual leave for a part-time employee?

Part-time employees have the same rights to paid annual leave. But the amount they earn each year depends on how many hours they work in their part-time role. This type of leave entitlement is called pro rata.

To figure out how much annual leave a part-time employee gets, use this formula:

(Part-time weekly hours ÷ 38) × 152 = hours of paid annual leave per year

Consider a part-time employee who works 25 hours a week:

25 ÷ 38 × 152 = 99 hours of paid annual leave per year

Just like full-time employees, part-time employees don’t get all their leave upfront. They also earn it over time, week by week.

Here’s how to work out the accrued leave:

99 hours ÷ 52 weeks = 1.904 hours of annual leave per week

So, if they’ve worked for 30 weeks:

1.904 hours × 30 weeks = 57.12 hours of holiday pay

Annual leave rules

Below, you can find some of the major rules you need to follow when managing annual leave:

• Employees can only take what they’ve earned: Employees are only entitled to annual leave they've accrued. If an employee hasn’t accrued enough, they can ask for unpaid leave. But you don’t have to approve it.

• Annual leave paid must reflect the base rate: When an employee takes leave, the annual leave payment must match their usual ordinary hour hourly rate. It doesn’t include overtime, bonuses, or commissions.

• Some employees get annual leave loading: Many Modern Awards mandate that you pay 17.5% on top of an employee's base pay rate while they're on annual leave. Some awards say you need to pay whichever is higher out of the 17.5% leave loading or the employee’s usual weekend or shift penalties.

• Unused annual leave carries over year to year: If an employee doesn’t take all their accrued annual leave in a year, the unused portion typically rolls over. Their award or contract may set different rules, so always double-check this.

• Too much leave may trigger excessive annual leave rules: If an employee accumulates over eight weeks of leave, you can make them take some of it. But you need to give them reasonable notice and try to find a time that works for both of you.

• Pay out unused annual leave when the employee's employment ends: When an employee’s employment ends, you must pay out any accrued leave they haven't used. The annual leave payment needs to match their base rate at the time their employment ends.

• Keep accurate records of every employee’s annual leave balance: If you don’t track leave properly, you might underpay staff, which can count as wage theft. Accurate records help you approve time off, stay compliant, and get payroll right.

Calculating annual leave manually? That’s so last financial year.

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Why correct annual leave calculations matter for compliance

Getting annual leave wrong, even if just by mistake, can be costly. Under the National Employment Standards (NES), full-time and part-time employees have a legal annual leave entitlement. If you underpay or miscalculate it, you might have to deal with Fair Work claims, backpay orders, and fines.

And it doesn't end there.

Messing up annual leave can lead to unhappy employees and reputational harm. Keeping accurate records and getting annual leave calculations and payments 100% correct should be non-negotiable.

Calculate, record, and pay annual leave automatically with Rippling

Getting annual leave right is a big part of keeping your business compliant and your team happy. Unfortunately, with so many variables, staying on top of it can be a resource-heavy ordeal. 

The good news is that with Rippling's all-in-one HR and payroll software, you can put the whole process on autopilot. Not only can this save your business a significant amount of time, but it can also cut down on errors massively.

Key features include:

• Automated annual leave calculations: Rippling automatically calculates and tracks leave accruals in real time based on each employee’s hours, contract type, and award.

• Employee self-service portal: Employees can request leave and track their annual leave balance through Rippling’s platform.

• Payroll integration: Rippling automatically syncs approved annual leave with payroll, ensuring annual leave payments are correct and on time.

• End-of-employment annual leave payouts: When an employee's employment ends, Rippling calculates and processes any unused leave.

Annual leave management is just a sliver of what Rippling can do. It's a comprehensive workforce management solution that lets you run HR, payroll, and IT from one place. And because everything connects through a single system, you always work off the same source of truth.

Annual leave calculation FAQs

What's the easiest way to calculate annual leave entitlements?

The simplest way to calculate annual leave is to use clever HR software that does it for you. A tool like Rippling, for example, acts as an automatic annual leave calculator. It takes care of calculating leave accumulation accurately while factoring in what matters most. For example, the NES, state and territory laws, modern awards, and enterprise agreements.

Do employees accumulate annual leave during a period of paid sick and carer's leave?

Yes, annual leave accumulates while an employee is on paid time off. This includes sick and carer’s leave. These leave types count as service. So, employees receive their usual leave accrual entitlements during that period.

What happens if a public holiday falls during annual leave?

The public holiday counts as paid time. It doesn't come out of their annual leave balance. Say an employee takes a week of annual leave and there’s a public holiday in the middle of it. You only deduct four days of ordinary hours from their annual leave balance, not five.

Should I calculate annual leave in hours, days, or weeks?

You can technically use any unit as long as you’re consistent and it reflects how the employee works. Most employers use hours of annual leave. This is generally the easiest way to keep it accurate across full-time, part-time, and irregular rosters.